Second home disposals in HMRC’s sights

HM Revenue and Customs is launching a compliance campaign to follow up on second home disposals. In the coming months, HMRC will send 14,000 ‘nudge’ letters to individuals it believes made a taxable residential property disposal in the 2018/19 tax year without declaring it on their tax return.

The letter gives details of the information HMRC is attempting to check and asks recipients to consider whether they should have paid capital gains tax on their second home disposals. It advises them to either amend their return or use HMRC’s digital disclosure service, if necessary.

A similar campaign last year produced a 15% success rate regarding disposals in the 2017/18 tax year, say tax advisors RSM UK. The number of letters sent out this year indicates HMRC believes that up to 2,000 taxpayers have a liability to disclose for 2018/19.

Previous ‘nudge letter’ campaigns have tended to focus on taxpayers whom HMRC suspects of having offshore assets that they have not disclosed. Those letters contained a controversial request for the recipients to sign and return a certificate of their tax position. However, the new letters regarding property disposals do not contain this request.

A second campaign will target employees whose taxable employment benefits information, as declared on their personal tax returns for the 2018/19 tax year, does not match the information provided to HMRC by employers.

The deadline for paying Capital Gains Tax after selling a residential property in the UK changed on 6 April 2020.  From this date if you’re a UK resident and sell a residential property in the UK you have 30 days to tell HMRC and pay any Capital Gains Tax owed.  If you don’t tell HMRC about any Capital Gains Tax within 30 days of completion, you may be sent a penalty as well as having to pay interest on what you owe.

Lindsey Sharples is a solicitor in the private client team at Barker Gotelee, Solicitors in Ipswich.

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